ATO Update: Division Tax 293
Division 293 tax notices of assessment for the 2012–13 financial year started issuing to affected individuals in late January 2014, with larger volumes expected to issue over the coming weeks. If your members' 'adjusted income' and low-tax contributions are greater than $300,000, they may have to pay an extra 15% tax on their taxable contributions.
Taxable contributions will be either the low-tax contributions amount, or the excess above the $300,000 threshold, whichever is the lower amount.
To calculate whether an individual has 'adjusted income' and low-tax contributions greater than $300,000, we will look at income and other information reported on their income tax return and contributions reported in their member contribution statement (MCS) and/or self-managed superannuation fund (SMSF) annual return.
Payment of Division 293 tax
Individuals are responsible for paying their Division 293 tax liability by the due date, which is generally 21 days after the Commissioner gives the notice of assessment. A release authority will be issued with the notice of assessment. Individuals can choose to use the release authority to have their fund pay the Division 293 tax or they can pay it out of their own pocket. Individuals have 120 days to present the release authority to their super fund. Funds have 30 days to action the release authority.
Deferred Division 293 tax
The Division 293 tax notice of assessment may also state that an amount of Division 293 tax is deferred. Taxable Division 293 contributions attributed to defined benefit superannuation interests are eligible for a deferred payment. The deferred liability does not need to be paid until an end benefit from the defined benefit superannuation interest it relates to becomes payable.
Individuals need to let us know when they have requested an end benefit be paid. At this time, we will contact the fund and ask them to calculate the end benefit cap. Funds have 14 days to provide this information to us once we have requested it. Funds can use the End Benefit Notice – superannuation provider Division 293 tax form to supply this information.